On July 25, 2017 at 9:00 AM, the Consumer Product Safety Commission will be hosting a public workshop on Recall Effectiveness. The workshop, to be held in the Hearing Room at CPSC Headquarters in Bethesda, Maryland, is intended to allow consumer safety professionals and the CPSC staff to discuss ways to improve the effectiveness of recalls. Mintz Levin’s product safety team will be in attendance.

The Workshop is structured slightly differently from previous CPSC-hosted presentations, featuring an open-discussion format in lieu of typical panel presentations. Due to the non-standard format, the meeting will not be webcast. Registration has also now closed for in-person attendance.

Following the workshop, the CPSC staff plans to: (1) develop a list of suggestions and ideas from stakeholders to share; and (2) create a summary report on key findings and suggestions for follow up.

In anticipation of the Workshop, Commissioner Elliot Kaye released a statement outlining what he believes are six basic principles to improve recall effectiveness.

Commissioner Kaye’s statement emphasizes:

Employing simple messaging and comprehensive outreach in communications to consumers about recalls,

Giving consumers the ability to choose the most convenient and holistic recall remedy for them whether it be in the form of a repair, replacement, or a refund, and

Enabling consumers to easily complete the steps to quickly obtain the recall remedy of their choosing at no cost.

Some components of Kaye’s principles go well beyond the requirements of the Consumer Product Safety Act, which is presumably why Commissioner Kaye included an amendment to the workshop notice to include enhanced CPSC authorities as one of the possible topics to be discussed at the event.

Of course, industry stakeholders likely will want to discuss what some consider to be outdated and ineffective requirements for CPSC recalls that consume finite resources and slow down the recall process. Other issues likely to be raised by industry stakeholders include addressing consumer “recall fatigue” through the use of a tiered system for recalls rather than treating all recalls the same, or the CPSC’s insistence on using the term “recall” for safety announcements that are essentially warnings because they do not involve returning or repairing a product.

Consumer product companies should pay careful attention to what likely will be a small step forward in a much larger and long-running discussion regarding recall effectiveness. Some of the ideas discussed during the event may one day turn into future expectations or requirements for conducting a recall with the CPSC.

]]>BREAKING: COURT RULES POSITIVELY FOR CPSC IN FEDERAL CIVIL PENALTY CASE AGAINST SPECTRUM BRANDShttps://www.consumerproductmatters.com/2016/11/breaking-court-rules-positively-for-cpsc-in-federal-civil-penalty-case-against-spectrum-brands/
Fri, 18 Nov 2016 19:38:57 +0000Matthew Cohen, Matt Howsare and Chuck Samuels]]>https://www.consumerproductmatters.com/?p=3774Continue Reading]]>We do not get many court decisions in the CPSC world, but yesterday we received one. Last evening, a Wisconsin federal district court essentially held in the Government’s case against Spectrum Brands, Inc. (Spectrum) that (1) Spectrum failed to timely report defective coffee pots in violation of Section 15(b) of the Consumer Product Safety Act (CPSA) because they could create a substantial product hazard, and (2) the Government’s imposition of a civil penalty pursuant to the CPSA was not in violation of Spectrum’s statutory or constitutional due process rights. In doing so, the Court rejected Spectrum’s procedural and substantive arguments, including that the CPSC’s claims were time barred and that the CPSA’s reporting requirements are unconstitutionally vague.

The Department of Justice and CPSC alleged that a company acquired by Spectrum (Applica Consumer Products) knowingly failed to timely report under Section 15(b) of the CPSA a hazardous defect relating to certain coffee pot handles. The Complaint alleged that the Company had received approximately 1,600 consumer complaints over a four year period (2008-2012) related to the breakage of the pots’ handle resulting in coffee spillage and burns on consumers.

In response to the filing of the lawsuit, Spectrum asserted, among other arguments, that (1) the Commission’s claims against it were time barred under the so-called Gabelli doctrine; (2) the CPSA’s reporting requirements are unconstitutionally vague; (3) the CPSC failed to provide fair notice that a report was required in light of its finding that other Spectrum coffeemakers with similar issues did not present a substantial product hazard; (4) the CPSC’s late-reporting determination was arbitrary and capricious; (5) Spectrum had no duty to report because the CPSC had already been “adequately informed” of the handle failures and (6) the CPSA did not authorize the CPSC to seek certain forms of injunctive relief including the establishment of a compliance program and prospective liquidated damages in the event of noncompliance.

The Court rejected all of these arguments and handed almost a total victory to the CPSC that may have future ramifications in the product safety community. For example, the decision certainly lends new credence to the CPSC’s common refrain to regulated entities “when in doubt, report” when deciding whether a product defect could present a substantial product hazard. The Court even went so far as to cite this common CPSC advice in the opinion. It’s also noteworthy that the Court concluded that the CPSC does not need to articulate its reasoning for a civil penalty amount in writing and provide more transparency in the process generally­­­—a complaint often raised by industry defendants.

Highlights from The Court’s Analysis

We will provide further analysis in the days to come but below are highlights from the Court’s opinion addressing the myriad of arguments made by the Parties:

1. The Court found that CPSA’s Reporting Requirement is Not Unduly Vague.

In response to Spectrum’s argument that CPSA’s reporting requirement is unconstitutionally vague, the Court concluded:

a ready response to defendant’s complaint that this guidance leaves it uncertain as to the scope of its reporting obligation is obvious: when in doubt, report…The statute, the CPSC, and the courts are not talking about existential doubt, but rather about concrete, quantifiable doubt born out of the existence of the factors identified in the statute and regulations, including the potential hazard created, the number of reported defects and injuries, and the number of potentially defective products that are in commerce.

2. The Court found Spectrum’s Fair Notice Argument Unpersuasive

The Court further rejected Spectrum’s argument that it did not have fair notice of its duty to report based on the Commission’s inaction in prior cases involving the breakage of coffee pot handles. The Court stated that “on its face, [the threshold for reporting a potential defect] is a lower standard than whether a substantial product hazard actually exists…this difference is confirmed in practice, as less than 20% of non-fast track Section 15(b) reports result in the CPSC finding that a substantial product hazard exists.” The Court added that “even if multiple cases involve products of a similar type or design and present similar risks of injury, a number of factors, including the nature of defect, as well as the number and severity of injuries, could reasonably lead to different results in analogous cases.”

3. The Court found that Spectrum Had a Duty to Immediately Report Under Section 15(b) of the CPSA.

The Court held that, under the facts of this case no reasonable jury could find that defendant “immediately” informed the CPSC about “information which reasonably supports the conclusion” that the carafes “contained a defect which could create a substantial product hazard.” According to the Court, Spectrum had information by May 2009 that supported the conclusion that the defect on the carafe handles posed a substantial product hazard.

The Court placed great emphasis on what it called the “driving principle” of the CPSA’s reporting requirement: “companies are strongly encouraged not to wait to report until a product defect causes a serious injury, but rather to report when they first appreciate that their product may contain a defect that could injure people, even when the risk of serious injury is in doubt.” Relatedly, the Court found that the CPSC was not “adequately informed” of the risk posed by the coffee pots because the CPSC did not have the same material information as the company.

4. The Court found that the Commission’s Approach to the Imposition of a Civil Penalty Did Not Violate Spectrum’s Due Process Rights.

Spectrum took issue with the lack of specificity with which the Commission determined the civil penalty amount, specifically the lack of any written record explaining and justifying its decision to seek civil penalties. The Court rejected this argument stating “it will not interfere with [the Commission’s] decision-making process.” According to the Court, “nothing in the CPSA or the regulations mandates how the Commission should consider the civil penalty factors, nor expressly limits the civil penalty amount ultimately sought by the DOJ…” The Court added, “transparency with respect to the factors the CPSC uses as a framework to determine what amount of civil penalties to seek is a far cry from transparency in the form of detailed, written records chronicling the commissioners’ actual decision-making in any particular referral for a civil enforcement action.”

5. The Court found that the Supreme Court’s Ruling in Gabelli Does Not Require the Government to File Suit Before the Alleged Violation is Complete.

Here, the Parties agreed that the default statute of limitations for civil penalty enforcement actions requires plaintiff to file suit “within five years from the date when the claim first accrued.” They disagreed, however, whether the duty to report continued until Spectrum knew that the CPSC had been adequately informed.

In Gabelli v. S.E.C., the Supreme Court found that the SEC could not apply the “discovery rule” when bringing an enforcement action later than five years after the violation occurred and the claim “first accrued.” Spectrum argued that the CPSC’s time to bring a claim began to run on the date the Company obtained reportable information.

The Court concluded, however, that Spectrum’s reporting obligation was ongoing and not “complete” if it failed to immediately report to the Commission; instead the Court found it “complete” once the company actually submitted a late report or had actual knowledge that the Commission had been informed. In other words, the Court applied the “continuing violation doctrine” as opposed to the “discovery rule.” The Court found this consistent with the CPSA’s purpose to encourage early reporting of defects to protect the public.

6. The Court Found that the CPSC Has the Ability to Seek the Injunctive Relief.

With respect to Spectrum’s argument that the CPSC does not have the statutory authority to seek injunctive relief, the Court stated that it did “not agree with defendant that the plain language of the CPSA precludes entering an injunction limiting conduct that is not ‘presently occurring,’ since the [CPSA] language authorizing the court to ‘restrain any violation’ of the CPSA is relatively broad.”

The Court also went on to state that “[u]nder the facts alleged, defendant engaged in knowing, arguably outrageous, conduct by failing to notify the CPSC about substantiated complaints that carafes were breaking due to design defects and harming individuals for over two years. Furthermore, even after issuing a recall notice for those defective carafes, Applica sold more of them, necessitating another recall. These facts are enough to plausibly plead a claim for injunctive relief.” The Court did, however, reserve judgment at this stage of the litigation on the question of whether such injunctive relief would be warranted by the underlying facts.

Conclusion

This case may have a significant impact on future CPSC enforcement policy and will be the subject of much discussion over the coming months, particularly as a new Republican Administration and Congress take control over the CPSC and its enforcement activities. It is not often that federal courts consider and interpret provisions of product safety laws administered by the CPSC. When they do the product safety community and all its stakeholders must pay careful attention. Spectrum and the Government will next litigate the parameters of the civil penalty to be imposed. We will see whether an appeal is in the works.

]]>Hot CPSC Jurisdictional Issues: Does the CPSC Have Regulatory Authority Over Amusement Park Rides and Guns?https://www.consumerproductmatters.com/2016/08/hot-cpsc-jurisdictional-issues-does-the-cpsc-have-regulatory-authority-over-amusement-park-rides-and-guns/
Thu, 11 Aug 2016 18:45:29 +0000Matthew Cohen]]>https://www.consumerproductmatters.com/?p=3676Continue Reading]]>In the wake of two tragic amusement park ride accidents in Kansas and Tennessee, and the ongoing political debate in America over gun safety issues, we felt it timely to help answer a question that continues to be asked in the media: does the U.S. Consumer Product Safety Commission (CPSC) have the authority to address the safety of amusement park rides and guns?

Amusement Park Rides. Every time there is a tragedy on a ride at an amusement park, the nation turns its attention and scrutiny on the CPSC as the nation’s safe products regulator. However, and crucially, the CPSC does not have jurisdiction over the safety of “fixed site” amusement park rides. In 1981, the Congress stripped the CPSC of its jurisdiction over these rides through an amendment to the Consumer Product Safety Act (CPSA). As a result, rides that are “permanently fixed to a site” (such as the ones at the Kansas and Tennessee parks) are subject to voluntary standards written by the ASTM F-24 Committee on Amusement Rides and Devices and state and local regulations.

The CPSC does have jurisdiction over “mobile” amusement rides (those transported from location to location). The agency also acts as a clearinghouse for safety information on ride incidents identified by Commission investigators and state and local ride officials. The following 2012 CPSC Directory of State Amusement Ride Safety Officials provides a helpful introductory overview of the CPSC’s activities with respect to amusement park rides and a directly of the relevant state and local officials dedicated to ride safety.

Gun Safety. Like fixed amusement park rides, firearms and ammunition are excluded from the definition of a “consumer product” in the CPSA. As a result, the CPSC doesnotregulate the safety of guns, shells and cartridges (the Bureau of Alcohol, Tobacco, and Firearms does).

Note: CPSC Commissioner Marietta Robinson recently issued a thoughtful perspective describing how she believes the CPSC can make guns safer and help bring down the number of accidental incidents involving firearms. According to Robinson, “guns should be defined as the consumer products they are so that we may do our job of protecting the American consumer.”

Despite its lack of jurisdiction to regulate the safety of guns and ammunition at present, the CPSC doeshave authority to regulate the safety of some products and accessories related to gun use. For example, the CPSC has asserted its jurisdiction over separate firearm trigger locking devices. Additionally, the CPSC has recalled previously gun storage boxes, handgun vaults, and gun holsters, thus all squarely falling within the regulatory authority of the agency. In fact, as recently as 2013, the White House requested the CPSC to “review and enhance as warranted safety standards for gun locks and safes” as a measure to improve gun safety.

Without a further act of Congress, the CPSC’s activities with respect to fixed amusement park rides and gun safety will not likely change.

]]>Massive CPSC Recall Leaked to the Press by “CPSC Source” Prior to Official Agency Announcementhttps://www.consumerproductmatters.com/2016/06/massive-cpsc-recall-leaked-to-the-press-by-cpsc-source-prior-to-official-agency-announcement/
Tue, 28 Jun 2016 18:28:45 +0000Matt Howsare and Chuck Samuels]]>https://www.consumerproductmatters.com/?p=3605Continue Reading]]>Today the U.S. Consumer Product Safety Commission (“CPSC”) and Health Canada announced a massive joint recall with IKEA involving over 35 million pieces of furniture that can pose a tip over hazard to small children. While we would normally write about the recall itself, a troubling development has caught our attention. A CPSC employee prematurely leaked the recall to staff reporter Tricia Nadolny at the Philadelphia Inquirer.

The CPSC and IKEA officially announced the recall this morning, but the Philadelphia Inquirer prematurely broke the story yesterday afternoon. The reporter confirmed in the story that her source works for the CPSC and did not have clearance to discuss the recall publicly. Additionally, the story included quotes from consumer advocates and other interested parties reacting to the recall—indicating that the reporter had the information for a decent amount of time prior to publishing the story.

After the Inquirer article was published, multiple other media outlets began reporting the recall. This likely put IKEA (and the CPSC) in an incredibly difficult situation of having to quickly make decisions about the release of information about the recall. For companies and legal counsel negotiating a recall—especially one of this magnitude—this is a nightmare scenario.

Even if a company has a contingency plan in the event a recall is leaked early (something we usually recommend for higher profile recalls), the carefully negotiated messaging and CPSC agreed rollout of the recall will have been thrown out the window and replaced by the leaked information. The company will be forced to scramble to respond to media questions while also not spoiling the originally planned announcement.

Additionally, and even more problematic, consumers who may have recalled units will start calling and emailing the company before they know the company’s official 800 number to call and before the company has sufficient staff to start fielding those calls. With over 29 million units involved in this specific recall, that could add up to quite a lot of phone calls and emails.

There are many compelling reasons why the CPSC and companies agree to not only the content of a recall, but also its timing. For a recall of this magnitude to be leaked to the media is a very troublesome precedent and cause for concern to companies negotiating higher profile recalls with the CPSC. Companies have not historically had much to fear in terms of recall information leaking from the agency, but this development potentially calls that into question.

Not only is it a violation of CPSC’s own statutes and regulations for recall information to be prematurely leaked to the press (and potentially could lead to employee sanctions), but it is also potentially disruptive to the effectiveness of the recall itself. The CPSC should take steps to ensure such leaks do not occur in the future.

]]>When Does A CPSC Late Reporting Violation First Accrue?https://www.consumerproductmatters.com/2016/05/when-does-a-cpsc-late-reporting-violation-first-accrue/
Thu, 19 May 2016 14:42:43 +0000Matt Howsare and Matthew Cohen]]>https://www.consumerproductmatters.com/?p=3549Continue Reading]]>This article originally appeared on Law360 on May 12, 2016 and provides additional analysis to our prior post on this subject.

After filing a Section 15(b) report and conducting a recall with the U.S. Consumer Product Safety Commission (CPSC), companies frequently ponder whether the CPSC believes the company timely filed its report under Section 15(b) of the Consumer Product Safety Act (CPSA) and, if not, whether the CPSC will launch an investigation that could lead to a civil penalty action. Unlike the experience of negotiating a recall where there is frequent contact with the CPSC within a defined time frame, the agency is usually silent and takes more time (sometimes years) to decide whether it will investigate whether a company met the statutory time deadline for filing the underlying Section 15(b) report.

In many cases, determining that a report was filed in such a manner to where the CPSC likely would not find reason for a timeliness investigation or civil penalty is relatively straightforward. In other cases where the timeliness of a report is more uncertain, however, only the CPSC’s statute of limitations for pursuing a civil penalty can provide similar comfort.

So what is the CPSC’s statute of limitations? The answer is not as straightforward as it may appear.

CPSC’s Statute of Limitations

The CPSA does not contain an explicit statute of limitations that answers this question. Instead, the CPSC operates under the general statute of limitations for the government to bring an enforcement action for a civil penalty, 28 U.S.C. § 2462, which states the following:

Except as otherwise provided by act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued. (emphasis added).

The Supreme Court’s Ruling in Gabelli v. SEC

The statute, 28 U.S.C. §2462, clearly states that any action must be commenced within five years. However, when a claim “first accrues” is less clear. In 2013, the U.S. Supreme Courtheld in Gabelli v. SEC that the U.S. Securities and Exchange Commission could not apply the “discovery rule” when bringing an enforcement action later than five years after the violation occurred (in that case, a fraud) and the claim “first accrued.” The application of the discovery rule would have allowed the government to delay the application of the five year statute of limitations until the SEC discovered (or should have discovered) the violation. But this position was unanimously rejected by the court in a 9-0 decision.

Should Gabelli or the “Continuing Violation Doctrine” Govern CPSC Late Reporting Cases?

In the wake of Gabelli, a major question has arisen about its application to the CPSC — when does a claim “first accrue” for a CPSC civil penalty enforcement action alleging a late reporting violation? Two companies, Michaels Stores Inc. and Spectrum Brands Inc. are currently litigating this question in two separate federal district court civil penalty proceedings.

Michaels and Spectrum have argued similarly that the CPSC’s allegation in each case — there was a specific point in time when the company had sufficient knowledge of a potential safety issue such that a report to the CPSC was required — also means that the claims against those companies “first accrued” on that date. In each case, the date cited by the CPSC for the initial reporting violation is more than five years prior to the CPSC’s initiation of a civil penalty proceeding in federal court. Citing the Supreme Court’s ruling in Gabelli, Michaels and Spectrum assert that an enforcement action cannot be brought more than five years after the date CPSC alleges a company first violated the statute by failing to report.

The CPSC, meanwhile, is not relying on the “discovery rule” dismissed in Gabelli. Rather, the CPSC argues that the failure to report is a “continuing violation” of the CPSA. Specifically, the CPSC asserts that under the “continuing violation doctrine” the late reporting claim accrues each day the violation occurs and the five year statute of limitations does not begin to run until a company actually reports to the CPSC.

A Sampling of the Arguments Surrounding the Application of the Continuing Violation Doctrine

In the Spectrum case pleadings, the CPSC asserts two primary arguments and cites a past civil penalty case to argue for the application of the continuing violation doctrine to the CPSA.

First, the CPSC argues that the language of the CPSC’s reporting statute establishes a continuing violation because it requires companies to report “unless [the company] has actual knowledge that the commission has been adequately informed.” Thus, according to the agency, the violation begins when the company obtains reportable information and continues “unless” the company has actual knowledge that the CPSC was adequately informed (i.e., when the company files a Section 15(b) report or the staff otherwise receives the information).

In response, Spectrum argues that the agency is attempting to convert the word “unless” to “until” in order to establish a continuing violation and that the use of the word unless creates an exception to the duty to report rather than creating “a duty to report extending until the CPSC is adequately informed.” Spectrum also argues that Congress explicitly created a separate continuing violation provision in the very next subsection of the CPSA and therefore, consistent with the canon of statutory interpretation whereby courts should presume such disparate treatment is intentional, the court should find that Congress did not intend to create a continuing violation for reporting violations.

Second, the CPSC argues that Congress intended for the reporting obligation to be continuing because the CPSA is intended to prevent harm to consumers by ensuring safety information comes to the agency in such a manner to where it can act as swiftly as possible. The agency argues that not applying the continuing violation doctrine would incentivize some companies to withhold safety information from the CPSC until the statute of limitations has expired. The CPSC also cites the Advance Machinery case from 1982, in which a federal court found that the CPSA’s reporting obligation is a continuing one and a contrary interpretation would mean that “a manufacturer could violate the reporting requirement without fear of punishment if it could successfully hide the evidence of the product defect from the [CPSC] for five years.”

Spectrum argues in response that these are policy arguments and the place of Congress rather than the courts to decide. Spectrum also points to language in Gabelli and the post-Gabelli Seventh Circuit case Midwest Generation, in which the appellate court cited Gabelli when it rejected an argument that there was a continuing violation exception for Clean Air Act cases subject to the 28 U.S.C. § 2462 statute of limitations. Regarding the Advance Machinery case, Spectrum dismisses its application and precedential value to the current dispute because it predates Gabelli.

The Status of Current Litigation

Spectrum and CPSC have fully briefed this issue in a motion for partial summary judgment pending before the District Court for the Western District of Wisconsin. The court has not yet ruled but its eventual ruling (and any subsequent appellate decisions) will have a significant impact on the CPSC and companies that may face future civil penalty enforcement actions.

Michaels filed a motion to dismiss in its civil penalty action currently pending before the District Court for the Northern District of Texas. Although that court denied Michael’s motion to dismiss, it is unclear whether the court’s decision in that case was a substantive ruling on the law — that is when a claim “first accrues” under 28 U.S.C. § 2462. In the Spectrum litigation, the CPSC points to that denial for support that a continuing violation exists. Spectrum, on the other hand, views the denial as a procedural ruling based on pleading standards rather than a substantive decision on whether the CPSA allows for a continuing violation.

The Impact of Each Possible Outcome

It is unclear how long it will take this issue to be decided and for any appeals to provide a final determination and clarity on this important issue. During this time, the CPSC likely will continue to interpret the reporting obligation to be a continuing one.

The application or nonapplication of the continuing violation doctrine to these cases is immensely important to both sides. If the doctrine does not apply to 28 U.S.C. § 2462 for CPSC late reporting cases, then the CPSC’s civil penalty lawsuit is time barred and will be dismissed in each of these cases. The CPSC will also be unable to prosecute any other civil penalty cases where more than five years has passed since the company was required to report to the CPSC. If the continuing violation doctrine does apply to reporting violations, then the current civil penalty cases will be allowed to proceed and the CPSC will have up to five years to a bring a civil penalty lawsuit against companies after a report is submitted to the CPSC.

]]>CPSC Chairman Vows that Every CPSC Voluntary Corrective Action Will Be Called a “Recall”https://www.consumerproductmatters.com/2016/05/cpsc-chairman-vows-that-every-cpsc-voluntary-corrective-action-will-be-called-a-recall/
Tue, 17 May 2016 16:05:26 +0000Matthew Cohen and Matt Howsare]]>https://www.consumerproductmatters.com/?p=3542Continue Reading]]>According to the Philadelphia Inquirer, CPSC Chairman Elliot Kaye announced in a meeting with consumer advocates that the agency will never again allow a company conducting a voluntary corrective action to call it anything other than a “recall.” Last year, after the announcement of a joint CPSC-IKEA “repair program” to address a furniture tip-over hazard involving the company’s popular Malm dresser, we asked whether the announcement indicated that the agency was possibly softening its practice of labeling every corrective action a recall.

The answer, according to Chairman Kaye, is a firm “no.”

According to the news article, the consumer advocates in the meeting questioned Kaye as to why the agency allowed IKEA to call the corrective action a “repair program” as opposed to a “recall” and why the dresser is still on the market despite not complying with the industry voluntary standard when not anchored. The advocates argued that the continued tip-over incidents, including a tragic death that seemingly caused the agency to reopen its investigation into the Malm dresser, indicate that the “repair program” terminology did not have the same effect on the public as a “recall” would have.

Chairman Kaye apparently agreed. Importantly, Kaye reportedly pledged that under his watch the agency will never make the sameconcession and will always use the term “recall.”He agreed with the advocates that the consumer awareness repair program announced by the CPSC and IKEA had been ineffective—saying there was “no daylight” between their position and his own.

Kaye also indicated that the CPSC would sue if the company did not take new “steps” to address alleged problems with the stability of the dresser. This should serve as an important lesson to all recalling companies—the CPSC can reopen a compliance investigation and ask for a company to take additional actions if the compliance staff believes that there are sufficient grounds to deem the previous corrective action ineffective.

This reaffirmation of the agency’s policy to call all corrective actions “recalls” is significant. The announcement of this “repair program” last year provided the regulated community with a recent precedent for using different terminology where consumers are provided repair kits or cautionary labeling rather than being required to return the product. But clearly, based on the Chairman’s comments, this was a one-off exception not to be repeated again.

]]>Zen Magnets Claims “90% Victory” Against CPSC in Magnet Recall Litigationhttps://www.consumerproductmatters.com/2016/04/zen-magnets-claims-90-victory-against-cpsc-in-magnet-recall-litigation/
Fri, 15 Apr 2016 17:23:12 +0000Matthew Cohen, Matt Howsare and Chuck Samuels]]>https://www.consumerproductmatters.com/?p=3465Continue Reading]]>On March 25, 2016, Administrative Law Judge Dean Metry found that the U.S. Consumer Product Safety Commission (“CPSC”) case counsel did not prove that high powered, small rare earth magnets (“SREMs”) (1) are defective as sold by Zen Magnets (“Zen”); and (2) constitute a substantial product hazard when sold with appropriate warnings, including proper age recommendations (click here for decision and order). Judge Metry concluded that because the SREMs are not designed, manufactured, or marketed for play to children under fourteen, the proper and intended use of Zen creates no exposure to danger, such as ingestion by small children. Judge Metry did rule, however, that Zen needed to recall a small number of magnets that did not contain sufficient warnings or were marketed for ages twelve years and older.

In response to the decision, Shihan Qu, Zen’s founder said:

“The outcome of the administrative adjudication . . . is in, and common sense has prevailed. This represents first and only administrative review of the merits of the CPSC’s claims regarding SREMs. [This] represents 90% victory, and 10% recall. For the CPSC, this is a huge loss: it’s the first time a CPSC administrative action has been challenged in court since 2001.”

Despite Zen’s claim of “90% victory,” the litigation at the CPSC is far from over. Subsequent to Judge Metry’s decision, CPSC lawyers litigating the case filed a Notice of Intent to Appeal to the full Commission (click here for notice). The Commission’s ability to essentially review the record de novo and adopt, modify, or set aside Judge Metry’s findings of fact and conclusions of law raises interesting questions given the history of the Commission with respect to these magnet products.

Under the CPSC’s regulations for adjudicative proceedings:

“The Commission shall consider the record as a whole or such parts of the record as are cited or as may be necessary to resolve the issues presented and, in addition, shall to the extent necessary or desirable, exercise all the powers which it could have exercised if it had made the Initial Decision.”

Furthermore, in rendering a final decision:

“The Commission shall adopt, modify, or set aside the findings, conclusions, and order contained in the Initial Decision, and shall include in its Final Decision a statement of the reasons for its action and any concurring or dissenting opinions…”

In other words, the ALJ is essentially acting as a magistrate whose “recommendation” (i.e., “Initial Judgment”) to the full Commission can be adopted, modified, or overruled as the Commission sees fit—without any deference to the administrative law judge’s initial findings of fact or conclusions of law. With a single vote, the Commission can substitute its opinion for Judge Metry’s.

As to what the full Commission may do, it is important to remember that the Commission voted to approve a safety standard banning such magnets outright, to sue Zen in Colorado for distributing previously recalled products (purchased from Star Networks), and engage in the underlying administrative litigation to force a recall of the Zen SREMs.

Should the Commission set aside Judge Metry’s opinion and order the full recall of these magnets, Zen can appeal to the federal Court of Appeals. A second appeal is a long time away and a further expenditure of time, energy, and resources on the part of Zen. However, while Zen still has a long road to travel to final closure, this administrative case shows that the CPSC can be challenged, with at least initial success, on recall determinations. Although the makeup of the Commission has changed over time, its direction on this issue has remained consistent.

Update on Colorado District Court Zen Litigation

Relatedly, in an earlier post we wrote about a federal court’s decision to enjoin Zen from selling repackaged high powered magnets originally imported by a company who later agreed to a CPSC recall. Because it is illegal to sell a recalled product, the CPSC argued that Zen had broken the law and the federal judge who heard the case agreed.

In the wake of Judge Metry’s ruling, Zen filed a motion asking for reconsideration of the court’s Order. Zen argues that the court should consider Judge Metry’s finding that a product’s design, manufacture, marketing, packaging and warnings, define what a product is. Based on that logic, Zen asserts that the repackaged products it sold (which incorporated magnets purchased from Star Networks) were factually and legally different from the Star Networks products that were the subject of Star’s recall.

The CPSC has opposed the Motion, and has additionally requested that the Court levy a “substantial” civil penalty against Zen Magnets for knowingly violating the CPSA that is near or at the maximum penalty allowed under the statute ($15,150,000). We will update our readers on further developments in that related but separate litigation.

There have been many twists and turns over the past four years concerning the CPSC’s regulation of certain high powered, rare-earth magnet sets and its litigation against various entities selling these magnets. In the latest chapter of the magnets saga, a federal court in Colorado has permanently enjoined Zen Magnets (Zen) from selling magnets purchased from another distributor, Star Networks USA (Star Networks) who later recalled them to settle administrative litigation with the CPSC.

It is illegal to resell previously recalled products under the Consumer Product Safety Act (CPSA). Zen asserted the products were “fungible commodities” and it had taken them out of the scope of the prohibition by repackaging and rebranding them. In a victory for the CPSC, the court disagreed vehemently and ordered Zen to recall the magnets. The court reasoned as follows:

“That Zen could lawfully sell other magnets it obtained elsewhere, even magnets that were identical in every single respect to the Star Magnets, is utterly irrelevant to the relatively simple issue before the Court, to wit: whether Zen sold particular magnets that were included in the Consent Agreement between Star and the CPSC….Zen’s argument that its new packaging and warnings somehow rendered the “raw” Star Magnets to be “fundamentally different products” is ultimately a red herring: neither the CPSA nor section 2068 contain some sort of “loophole” or a “safe harbor” permitting the sale of “any consumer product that is subject to voluntary corrective action” so long as the seller purportedly addresses the hazard that led the CPSC to take action in the first place…”

By way of background, in 2012, the CPSC commenced administrative litigation against multiple rare-earth magnet companies, including Zen and Star Networks, who refused to voluntarily recall magnetic adult desk-toy products deemed to be defective by CPSC staff. A number of those companies settled the CPSC litigation, including Star Networks in August 2014, and, as part of the settlement, Star Networks recalled its high-powered magnet products.

During the settlement negotiations between CPSC and Star Networks, Zen, who did not settle its administrative litigation with the CPSC, purchased from Star Networks a substantial amount of individual, small magnets (917,000 total units) at a substantial discount. Importantly, these magnets were the same products recalled as a component of Star Network’s forthcoming settlement agreement with the CPSC.

Zen’s purchase of these magnets right before the settlement was finalized—and its comingling and repackaging of them with its own magnet inventory—led the government to file a second lawsuit against Zen, this time in Colorado federal court. In March 2015, the CPSC sought and received a preliminary injunction enjoining Zen from selling the magnets purchased from Star Networks as the CPSA prohibits the re-sale of any recalled products.

In the current proceeding, in which the government sought a permanent injunction of the same activity, Zen argued primarily that the products purchased from Star Networks had been unbranded and converted into raw magnets, an alleged “fungible commodity,” which Zen was still permitted to sell or incorporate into its products. The court disagreed and concluded that the CPSA plainly prohibited the sale of Star Magnets because they had been recalled.

The court’s ruling essentially holds that, once recalled, the products could never be rehabilitated or repackaged to where they could be sold again. However, the court did leave a potential opening as to recalled products that are then “physically altered.” (See page 15 of ruling).

The court has now ordered Zen to take the following actions:

(1) conduct a consumer wide recall of Zen’s products incorporating the previously recalled Star Networks magnets (the court found that it had the authority to order this);

(2) provide notification to consumers of the ordered recall, offer consumers a full or partial refund depending on the set possessed by the consumer;

(3) post the order on its website for a period of two years;

(4) notify certain current and future business associates of the order; and

(5) destroy or dispose of the recalled products in its inventory and distribution chain.

Finally, the court also granted summary judgment on the CPSC’s claim that Zen “knowingly” violated the CPSA in continuing to sell the Star Networks magnets. This ruling will allow the CPSC to recommend to the court that a civil penalty should be imposed and we expect that the CPSC will make such a recommendation. Under the court’s Order, the CPSC must do this by April 6.

Zen can appeal this ruling to the Tenth Circuit should it chose to do so. The Tenth Circuit is the same appellate court that is currently considering the CPSC’s safety regulation of high powered, rare earth magnets promulgated in September 2014) (see previous post here).

“Today’s decision puts the rule of law and the safety of children above the profits sought by Zen Magnets. Far too many children have been rushed into hospital emergency rooms to have multiple, high-powered magnets surgically removed from their stomachs. Young children have suffered infections and one child tragically died from swallowing loose magnets that often look like candy. The ruling is a major victory for the safety of consumers. Our pursuit of this case makes clear we will not tolerate the sale of recalled goods in any form.”

]]>CPSC Major ‘Repair Program’ Is Not Labeled A ‘Recall’https://www.consumerproductmatters.com/2015/08/cpsc-major-repair-program-is-not-labeled-a-recall/
Tue, 11 Aug 2015 15:58:46 +0000Matt Howsare and Chuck Samuels]]>http://www.consumerproductmatters.com/?p=3141Continue Reading]]>[This article originally appeared on Law360 on August 7, 2015 and updates our prior post on this CPSC corrective action]

On July 22, 2015, the U.S. Consumer Product Safety Commission and major furniture company IKEA jointly announced a “repair program” to address the serious and complex hazard of furniture tip-over posed by 27 million chests and dressers sold by the company. The repair program offers free wall anchoring repair kits so consumers can secure the chests and dressers to the wall to reduce the likelihood of a furniture tip-over incident.

If you were not looking for it, then you could have easily missed that the announcement did not contain the word “recall.” The corrective action is also not included in CPSC’s recall announcement list and is not listed as a recall on agency’s saferproducts.gov public database.

So why is this significant?

The fact that many people did not catch that the corrective action was not called a “recall” goes to the core of an argument made by the regulated community over the past few years: not every voluntary corrective action must or should be called a “recall.” For example, there may be important safety actions and programs undertaken by a company that may not be strictly required under the law, but nonetheless are in the public interest. Even legally required actions are often not strictly a “recall” but rather are another form of corrective action — such as a repair or a warning.

Background on CPSC Terminology for Corrective Actions

In 2013, the CPSC proposed to formalize its practice of requiring that every “corrective action” be labeled a “recall.” Since the CPSC proposal, and going even further back to 2009, every corrective action publicized by the agency has, in fact, been labeled a recall.

The uniform nature of the CPSC’s policy is demonstrated by the fact that the last corrective action the CPSC agreed to not label as a recall occurred in March 2009. Since that time, the agency has announced several recalls where the corrective action was not a traditional “recall” of a product. Consumer remedies for these types of recalls have included obtaining a caution label instructing consumers to wear protective gloves when removing a product, receiving revised instructions not to over inflate an exercise ball and performing an inspection to check for mold, among others.

In explaining the rationale behind the proposal to formalize this practice in the pending controversial “voluntary recalls” rule-making, the agency stated:

[A] voluntary recall notice should include the word ‘recall’ in the heading and text. For many years, the commission staff’s Recall Handbook has directed firms to use the term ‘recall’ in the heading and text. The word ‘recall’ draws media and consumer attention to the notice and to the information contained in the notice. In addition, use of the term ‘recall’ draws attention to the notice more effectively than omitting the term or using an alternative term. A recall notice must be read to be effective. Drawing attention to the notice through the use of the word ‘recall’ increases the likelihood that the notice will be read and will help effectuate the purposes of the CPSA and Consumer Product Safety Improvement Act.”

In response, the National Association of Manufacturers (NAM) argued that the uniform use of the word recall may contribute to “recall fatigue” among consumers. In comments to the agency, NAM argued:

Calling a corrective action plan a ‘recall’ when the action needed to address a potential hazard is far more limited than a refund or replacement could mislead consumers. Calling each and every corrective action a ‘recall’ also adds to growing concern that consumers are experiencing ‘recall fatigue’ as a result of the increasing number of recalls. As a result of recall overload, getting the attention of consumers when a notice involves a significant risk of harm contrasted with a minor technical issue or action out of an abundance of caution based on unverified information is becoming increasingly difficult. Rather than address these types of legitimate concerns, the proposed rule will contribute to this recall fatigue.”

Unfortunately, it is not known how much additional media and consumer attention corrective actions receive when they are labeled a “recall” instead of something else. Similarly, it is not known whether calling all types of corrective actions “recalls” is contributing to consumer “recall fatigue” as groups like NAM have argued and USA Today and the Washington Post have written about previously.

Given the continued admonition from the CPSC and consumer advocacy groups to the regulated community that corrective actions remain generally ineffective and more needs to be done, however, it is fair to say that labeling every corrective action a recall over the past six years has not turned out to be a game changer in terms of making them more effective.

The Effect of Using “Repair Program” Instead of “Recall”

After CPSC’s announcement of the IKEA repair program, the Today Show, the New York Times, the Washington Post, USA Today, ABC News, the Associated Press, CNN and nearly 700 other local, regional, national and international media outlets carried some version of the announcement alerting consumers to the repair program. Although some news organizations incorrectly labeled the corrective action a recall — and it cannot be known at this time how many consumers will obtain free repair kits in response to the announcement — it is fair to say that the message does not appear to have been diluted based on the fact that the corrective action was called a “repair program” rather than a “recall.”

While some may say that this corrective action is an exception due to the high profile of the company involved, the nature of the furniture tip-over hazard and the high number of units affected, it could just as easily be said that this corrective action demonstrates that media attention and consumer response is directly related to the characteristics of each individual corrective action itself and not necessarily what the corrective action is labeled. Certainly, here, the media response was no less vibrant because the corrective action was called a “repair program.” Additionally, IKEA has already described the consumer response to its program as “quite robust.”

Moving Forward

It remains to be seen how and if the CPSC will soften its policy regarding the labeling of corrective actions of this nature or whether this repair program, the first of its kind in six years, is a not-to-be-repeated exception for reasons only the CPSC and the company will ever know. Indeed, CPSC Chairman Elliot Kaye has already indicated that this was a “one-off” and is not a sign of a policy change moving forward. At the very least though, this example does show there are at least some rare situations in which the CPSC may accept a corrective action that is not labeled a recall.

]]>Shifting CPSC Recall Landscape? Agency Announces Major “Repair Program” that is not Labeled a “Recall”https://www.consumerproductmatters.com/2015/07/shifting-cpsc-recall-landscape-agency-announces-major-repair-program-that-is-not-labeled-a-recall/
Thu, 23 Jul 2015 18:37:04 +0000Matt Howsare, Chuck Samuels and Matthew Cohen]]>http://www.consumerproductmatters.com/?p=3110Continue Reading]]>Yesterday the CPSC and major furniture company IKEA jointly announced a “repair program” to address the serious and complex hazard of furniture tip over posed by 27 million chests and dressers sold by the company. The repair program offers free wall anchoring repair kits so consumers can secure the chests and dressers to the wall to reduce the likelihood of a tip-over incident (more background on furniture tip over and wall-anchoring here).

The fact that many people probably didn’t catch the fact that the corrective action was not called a “recall” goes right to the core of an argument made by the regulated community over the past few years: not every voluntary corrective action must or should be called a “recall.” For example, there may be important safety actions and programs undertaken that may not be strictly required under the law but nonetheless are in the public interest. Even legally required actions are often not strictly a “recall” but another form of corrective action—such as a repair.

In 2013, however, the CPSC proposed to formalize its practice of insisting that every “corrective action” should be labeled a “recall.” Since that time, and for a number of years prior, every corrective action publicized by the agency has, in fact, been labeled a recall. In explaining the rationale behind the proposal to formalize this practice in the controversial “voluntary recalls” rulemaking, the agency stated:

“[A] voluntary recall notice should include the word ‘recall’ in the heading and text. For many years, the Commission staff’s Recall Handbook has directed firms to use the term ‘recall’ in the heading and text. The word ‘recall’ draws media and consumer attention to the notice and to the information contained in the notice. In addition, use of the term ‘recall’ draws attention to the notice more effectively than omitting the term or using an alternative term. A recall notice must be read to be effective. Drawing attention to the notice through the use of the word ‘recall’ increases the likelihood that the notice will be read and will help effectuate the purposes of the CPSA and Consumer Product Safety Improvement Act.”

Although some of those news organizations incorrectly labeled the corrective action a recall—and it can’t be known at this time how many consumers will obtain free repair kits in response to the announcement—it’s fair to say that the message doesn’t appear to have been diluted based on the fact that it was called a “repair program” rather than a “recall.” And while some may say that this corrective action is an exception due to the high profile of the company involved and the number of units affected, it could just as easily be said that this corrective action demonstrates that media attention and consumer response is directly related to the characteristics of each individual corrective action itself and not necessarily what the corrective action is labeled.

It remains to be seen how and if the CPSC will soften its policy regarding the labeling of corrective actions or whether this repair program is a not-to-be-repeated exception for reasons only the CPSC and the company will ever know. At the very least though, it does offer hope to companies that there are at least some situations in which the CPSC can be persuaded that a corrective action should not be labeled a recall.

]]>What is CPSC’s Fast Track Recall Program and When Should Companies Utilize It?https://www.consumerproductmatters.com/2015/07/what-is-cpscs-fast-track-recall-program-and-when-should-companies-utilize-it/
Tue, 07 Jul 2015 17:51:18 +0000Matt Howsare and Chuck Samuels]]>http://www.consumerproductmatters.com/?p=3073Continue Reading]]>So what is the CPSC’s “fast track recall” program and what is the benefit of participating in it? What is a “stop sale notice” and why does the CPSC generally request it for fast track recalls? What else is required by the CPSC in order to participate in the program and what are the potential downsides? When should a company utilize fast track? These are common questions for companies who believe they could have a product safety issue and are already seriously considering a voluntary recall.

What is the CPSC “Fast Track Recall” Program?

In the CPSC’s own words:

The fast track recall program helps consumers by removing potentially hazardous products from the marketplace as quickly and efficiently as possible and rewards businesses that act quickly.”

The consumer and company benefits of the fast track program are relatively simple. In exchange for a company reporting a safety issue and being prepared to quickly initiate a recall (within 20 business days), the CPSC will forego making a preliminary determination (“PD”) of whether the product presents a substantial product hazard and will also shepherd the recall through the agency quicker than if the company filed a normal Section 15(b) report. Some companies wish to avoid a PD for product liability reasons and many simply want to speed up the recall process.

What is a “Stop Sale” Notice?

A stop sale notice is a communication made to retailers and distributors asking them to stop selling or distributing a product in order to prevent additional products that are potentially defective from reaching consumers. In order to participate in the fast track recall program, the agency traditionally expects a company to have already issued or be willing to issue a stop sale notice to retailers and distributors relatively quickly.

This makes sense from a safety point of view because the implication of filing a fast track recall report is that you have a problematic product and intend to conduct a recall. When conducting a recall, it is easier and safer to stop sale beforehand rather than trying to get those same products back from consumers. Further, from a product liability standpoint it’s often not prudent to keep selling a product when you know and in effect have told the CPSC it’s potentially defective.

For this reason, stopping sale would usually be an early and prudent action even if you cannot be sure that the CPSC will ultimately agree with the proposed corrective action plan (often referred to as a “CAP”). If you’re not ready to stop sale, then you’re also probably not ready to file for fast track and will run the risk of being removed from the program should the CPSC compliance staff determine a stop sale should be issued and you’re unwilling to issue one.

If you are unsure about issuing a stop sale notice, then you should consider filing a normal section 15(b) report. If you still wish to file a fast track report, then you should also be prepared to offer the CPSC compliance staff a good justification for why a stop sale should not be issued. In a circumstance where a corrective action plan is agreed to and will be executed fairly quickly, for example, it may simply cause less supply chain confusion to forego a stop sale notice and make only one communication regarding the recall.

What Else is Usually Required to Participate in CPSC’s Fast Track Program?

In addition to the stop sale notice, participation in the fast-track program also generally requires the following:

Full Section 15(b) report,

CPSC-approved remedy for consumers,

Joint press release with the CPSC,

Point-of-purchase posters,

CPSC-approved reverse logistics plan,

Proposed website recall notification,

Letters to the distribution chain, and

Proposed social media announcement.

Not all of these items are required at the time of filing and it is not uncommon for initial fast track reports to be incomplete. Keep in mind, however, that the CPSC compliance officer likely will want to have the missing information soon thereafter.

What are the Potential Downsides of Utilizing the Fast Track Program?

The fast track program is not perfect. For example, stakeholders in the regulated community have recently complained that the CPSC asks companies to have everything ready for fast track recalls within 20 business days but then sometimes takes much longer to approve the recall announcements because it too heavily scrutinizes proposed corrective action plans. There is also a risk that the CPSC and the company will not be able to agree on a recall remedy, the wording of a press release, a reverse logistics plan, the timing of the announcement, or other details of the recall.

If a company cannot reach an agreement with the CPSC, however, the company can remove itself from the fast track recall program and undergo a normal recall investigation. Granted, the company will have potentially already issued a stop sale throughout its supply chain and indicated at least some minimal level of safety risk to CPSC. These potential downsides should be carefully weighed against all other considerations prior to choosing to participate in the fast track recall program though.

When Should a Company Utilize Fast Track?

When clients ask about utilizing the fast track recall program versus making a regular report to the CPSC, our counsel is that the fast track program is not for companies who wish to merely report to the agency and may or may not conduct a recall. Generally, that type of report should be made through the normal Section 15(b) reporting process.

Instead, the fast track program is intended for companies that are ready and willing to conduct a recall regardless of whether they are just proactively proposing to recall a product that poses a low risk or because there is a clear hazard associated with the product. In terms of situations where fast track may not be an ideal option, the CPSC’s fast track recall webpage states that companies may choose not to participate in fast track in circumstances where:

There are complex technical issues that require more time to resolve;

The decision has not already been made to work on a potential voluntary corrective action with the CPSC; or

A company is unable to move quickly enough to meet the fast track deadlines.

Utilizing CPSC’s fast track recall program will not make sense for every company and in all situations. Generally though, if you are ready to conduct a recall and have confidence in the efficacy of your proposed corrective action plan, then the fast track option may be preferable to filing a normal Section 15(b) report.

]]>Tenth Circuit Lifts Stay on CPSC’s Magnets Rulehttps://www.consumerproductmatters.com/2015/05/tenth-circuit-lifts-stay-on-cpscs-magnets-rule/
Tue, 05 May 2015 19:01:00 +0000Matthew Cohen and Matt Howsare]]>http://www.consumerproductmatters.com/?p=2982Continue Reading]]>As we wrote about earlier this month, on April 1, 2015, the U.S. Court of Appeals for the Tenth Circuit (“Tenth Circuit”) temporarily stayed the effective date of “the enforcement and effect” of the CPSC’s safety standard for certain high-powered magnet sets. Specifically, the Court stayed the safety rule pending consideration of the CPSC’s response to plaintiff Zen Magnets’ (“Zen” or “the Company”) motion to stay the rule pending judicial review. While the temporary stay ordered by the Tenth Circuit was widely reported in the media, what followed soon thereafter – the lifting of that stay – has received scant attention.

Irreparable injury absent the stay because it had provided no evidence that the Company itself would be injured;

Zen was likely to prevail on the underlying merits of its petition because the Company simply disagreed with how the CPSC extrapolated certain data and weighed competing policy considerations; and

The public policy interest in enactment of a stay outweighed the important consumer safety considerations involved here.

One week later, on April 20, the Tenth Circuit reversed course and lifted its temporary stay after denying Zen’s motion. In a short, two-page order, the court found that Zen had not satisfied the four factors considered by the court in granting a stay. As a result of the court’s order, the magnet safety rule immediately went into effect and there will be no stay on the enforcement of the rule pending the Tenth Circuit’s review of the rule itself.

Zen and the CPSC are now in the process of briefing Zen’s petition on the underlying rule. The Tenth Circuit will likely hear oral argument on the rule itself over the coming months. We will continue to update our readers on both this appellate litigation to review the underlying rule as well as the litigation currently awaiting a decision from an administrative law judge on CPSC’s determination that Zen’s spherical rare earth magnet sets pose a substantial product hazard and should be subject to a mandatory product recall.

]]>CPSC & DOJ Sue Michaels Stores for Failing to Report Product Safety Hazard and Filing Misleading Informationhttps://www.consumerproductmatters.com/2015/04/cpsc-doj-sue-michaels-stores-for-failing-to-report-product-safety-hazard-and-filing-misleading-information/
Thu, 23 Apr 2015 18:52:33 +0000Matthew Cohen, Matt Howsare and Chuck Samuels]]>http://www.consumerproductmatters.com/?p=2962Continue Reading]]> For the first time in recent memory, the Department of Justice (DOJ) and Consumer Product Safety Commission (CPSC) jointly announced the filing of a lawsuit in federal court for the imposition of a civil penalty and injunctive relief for violation of the Consumer Product Safety Act (CPSA). The lawsuit is against arts and crafts retailer Michaels Stores and its subsidiary Michaels Stores Procurement Co. Inc. (collectively, “Michaels” or “the Company”) for failing to timely report a potential product safety hazard to the CPSC. Unlike other CPSC civil penalty actions involving DOJ, this penalty does not already have a negotiated consent decree in place and it appears that the case could be fully litigated.

The complaint alleges that Michaels knowingly violated the CPSA by failing to timely report to the CPSC that the glass walls of certain vases were too thin to withstand normal handling, thereby posing a laceration hazard to consumers. According to the complaint, multiple consumers suffered injuries, including nerve damage and hand surgeries, from 2007 to late 2009.

Michaels allegedly did not report the potential defect to the Commission until February 2010. Of course, we only know one side of the allegations, and Michaels will respond to those allegations in the coming weeks. The Company did state that “it believes the facts will show it acted promptly and appropriately.”

Notably, the complaint also alleges that when Michaels filed an initial report with the CPSC in 2010, it provided “only the limited information required to be furnished by distributors and retailers” under the CPSA. However, and critically, as the complaint sets forth in more detail, manufacturers—whose definition under the CPSA includes importers of record—are required to provide more information to the Commission than retailers.

According to the government, Michaels’ report conveyed the false impression that the Company did not import the vases, even though the Company was the importer of record and thus was required to submit significantly more information as the manufacturer of the vases. The lawsuit alleges that Michaels made this misrepresentation in order to avoid the responsibility of undertaking a product recall.

As for the remedy, the government is seeking a civil penalty (in an unidentified amount) and various forms of injunctive relief, including the enactment of a stringent compliance program to ensure future compliance with CPSC reporting obligations. This requested relief is similar to what the CPSC has required in almost all civil penalty agreements with other companies over the past few years.

What makes this complaint so newsworthy is that the government and Michaels plan to litigate the imposition of a civil penalty. As noted above, this is not a frequent occurrence because companies tend to settle civil penalty claims rather than litigate. Given how infrequently civil penalties are litigated and the lack of any legal precedent guiding civil penalty negotiations under the heightened $15 million penalty limits, any judgment likely would have a wide-ranging impact on all future civil penalty negotiations between companies and the CPSC.

As we have previously stated, we expect the Commission to remain active in 2015 in bringing enforcement actions against companies for violations of the CPSA and other safety statutes.

We will watch this case closely and update our readers on any noteworthy developments.

]]>Tenth Circuit Stays April 1 Effective Date of CPSC’s Magnets Safety Rulehttps://www.consumerproductmatters.com/2015/04/federal-appellate-court-stays-april-1-effective-date-of-final-magnets-safety-rule/
Mon, 06 Apr 2015 17:39:51 +0000Matthew Cohen, Matt Howsare and Chuck Samuels]]>http://www.consumerproductmatters.com/?p=2919Continue Reading]]>Over the past year, we have blogged about the CPSC’s rulemaking process to regulate high-powered magnet sets via a safety standard as well as the administrative complaints brought by the agency to force multiple companies (e.g., Buckyballs and Zen Magnets) to recall certain magnetic products deemed to be defective by CPSC staff. In a major development that could potentially affect both, last Wednesday (April 1), the U.S. Court of Appeals for Tenth Circuit (“Tenth Circuit”) issued an order temporarily staying the “enforcement and effect of the Safety Standard for Magnet Sets…until further order of the court.” Given the infrequency of such stays, and publicity surrounding both the regulation of these magnets and administrative litigation over whether the magnets should be recalled, this recent news is very noteworthy.

Zen Magnets (“Zen” or “the Company”), who has refused to voluntarily recall its spherical rare-earth magnet sets (“SREMs”) at the request of the CPSC, filed with the Tenth Circuit last December a petition for the court to review the final magnets rule. The CPSC’s final rule establishes safety requirements for these rare earth magnets. However, the practical effect of the rule is a ban on the sale and/or distribution of these products. Last week, on April 1, the date the rule went into effect, the Company filed a Motion to Stay (“Motion”) the enactment and enforcement of the agency’s rule. Three hours later, the court granted the Motion.

The Tenth Circuit’s stay of enforcement of the rule pending review is significant. Courts typically do not grant motions to stay the enforcement of a final agency rule while reviewing challenges to the rule itself. In fact, litigants seeking a stay of a final agency rule must convince the court that the following factors considered weigh in their favor:

Likelihood of success on appeal;

Threat of irreparable harm if the stay is not granted;

Absence of harm to opposing parties if the stay is granted; and

Any risk of harm to the public interest.

This balancing test is substantially similar to the one courts use in granting or denying preliminary injunctions. As litigators know, both stays of enforcement (and preliminary injunctions) are not granted in the ordinary course.

Nevertheless, in its Motion, Zen argued primarily to the Tenth Circuit that the Commission relied upon fundamentally flawed data related to the number of injuries caused by the regulated magnets. Zen’s overarching argument regarding alleged injuries caused by the banned SREMs is that the Commission’s data and methodology included incidents from all magnet ingestions, not just SREMs.

According to Zen, the CPSC’s methodology must be flawed because it projected a similar number of incidents involving SREMs using data from 2006-2009, which is before SREMs were actively being sold in the U.S. Zen also argued in its brief that the Commission did not give proper weight to the public’s need for such magnets, including the public’s use of the magnets for educational and artistic purposes, and that the Commission cannot show by substantial evidence that the final magnets rule is reasonably necessary to eliminate or reduce an unreasonable risk of injury.

Zen’s most persuasive arguments for the temporary stay, however, potentially had little to do with the substance of the rule itself. Instead, the court could have mainly considered the other three factors it must weigh and Zen’s arguments that the company likely would permanently cease operations if the rule went into effect, there would be no harm directly to the opposing party (the CPSC), and the risk of harm to the public interest is low.

The court has given the Commission until April 14 to respond. If the Commission’s recent brief filed in the administrative litigation against Zen provides any indication of how the Commission will respond to Zen’s Motion in the Tenth Circuit, we should expect the Commission to stand by the injury data and methodology used to support the enactment of the magnets safety standard in the first place. In that brief, the Commission argued that it demonstrated by a preponderance of the evidence that their epidemiologist’s testimony “is a valid projection of 2,900 estimated yearly SREM ingestions.”

In any event, the practical effect of the Tenth Circuit’s stay is that the SREM ban will not take effect or be enforced until the Tenth Circuit can at least consider the CPSC’s response concerning the stay order, which is due on April 14. Whether anything can be read into the decision, which did not provide any reasoning, regarding the court’s opinion on Zen’s likelihood of success or if the court’s decision was based primarily on consideration of the likelihood of harm to the public versus the harm to Zen, is anybody’s guess (see Zen’s analysis here).

We will continue to update our readers on both this appellate litigation to review the underlying rule as well as the litigation before the CPSC administrative law judge to deem SREMs substantial product hazards and order a mandatory product recall.

]]>CPSC and E-Commerce Giant Alibaba Ink Deal to Block Sale of Recalled Products to U.S. Consumershttps://www.consumerproductmatters.com/2015/01/cpsc-and-e-commerce-giant-alibaba-ink-deal-to-block-sale-of-recalled-products-to-us-consumers/
Wed, 14 Jan 2015 17:30:37 +0000Matt Howsare]]>http://www.consumerproductmatters.com/?p=2764Continue Reading]]>Following an ABC 20/20 investigative story where CPSC Chairman Elliot Kaye called Craigslist’s failure to block the sale of recalled products “morally irresponsible,” the agency announced yesterday that it has entered into an agreement with the Chinese e-commerce company Alibaba Group (“Alibaba”) to stop the sale of products recalled by the CPSC to U.S. consumers. The agreement resembles similar arrangements with other online marketplaces like eBay and Amazon, which date back to initiatives started in 2000 under former CPSC Chairman Ann Brown.

Two of the primary components of such arrangements are for online marketplace companies to:

Enact measures (such as keyword filters) that proactively block the ability of third parties using the online marketplace service to list recalled products for sale, and

Establish a direct line of contact for the CPSC to request removal of recalled items listed for sale

These types of agreements are significant because online marketplaces like Amazon, eBay, and Alibaba are not subject to CPSC enforcement actions where they do not sell items directly to consumers and only act as intermediaries that connect third party sellers and buyers. Instead, the millions of third party sellers using those services are the parties the CPSC must seek out to bring enforcement actions. This presents difficult enforcement challenges for the agency due to resource constraints and third party sellers who might be located outside of the U.S.

Making the agency’s determination on this issue clear, Chairman Kaye was quoted by the New York Times as stating that the agency was “certainly going to hold (Alibaba’s) feet to the fire” and would not hesitate to pressure the company should it fail to uphold its end of the agreement.

The CPSC is not focusing on online marketplace companies exclusively in its effort to stop the online sale of recalled products. As we’ve written about before, the CPSC has also recently started to request companies conducting recalls to take steps to monitor online websites for the sale or resale of the product being recalled and report their efforts to the agency as a component of their monthly recall reports.

Update: After some uncertainty, Congress passed and the President is expected to sign the 2015 Omnibus bill into law.

The report language of the Omnibus bill incorporated by reference House Report 113-508, which accompanied a previous appropriations bill passed by the House earlier this year. This additional report language addresses several key CPSC issues, including: import safety, the phthalates Chronic Hazard Advisory Panel, window coverings, and the agency’s proposed amendments to its regulations on voluntary recalls, 6(b) information disclosure, and certificates of compliance.

For further details about this additional report language, please read our previous post from earlier this year.

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Yesterday congressional leaders announced that they reached a deal on an omnibus bill that will fund the federal government through September 30, 2015. Included in this bill is $123 million in funding for the CPSC, which is the amount the agency requested in its 2015 Budget Request and an increase of $5 million from what the agency received in 2014.

Not included in the omnibus or other 2015 legislation, however, is statutory language authorizing the agency to collect user fees from importers of consumer products. As a part of its 2015 Budget Request released in March, the agency sought the statutory authority to collect user fees to fund an estimated $36 million in annual costs for a full-scale national import surveillance program. Currently, the CPSC’s import surveillance program is in its pilot stage and limited in scope. In May, the National Association of Manufacturers (NAM) and 40+ other trade associations wrote a letter to then Acting-Chairman Adler raising concerns about this type of user fee authorization.

Additional items of note that Congress outlined in its report language accompanying the Omnibus included:

A requirement that $1 million be allocated to test burden reduction, a report within 90 days on the status of the agency’s test burden reduction efforts, and a public timeline of what steps, if any, the agency can take to reduce testing costs while still assuring compliance.

A requirement that $4 million be allocated to import surveillance activities.

Submission of a report within 180 days outlining legislative changes necessary to allow the agency to streamline updates to federal safety standards where the corresponding voluntary standards have more advanced safety criteria.

Submission of a report within 180 days on progress made by the National Operating Committee on Standards for Athletic Equipment (NOCSAE) to update football helmet standards for new and reconditioned helmets.

Direction to the agency to reduce or limit the use of flame retardant chemicals as the agency develops its upholstered furniture safety standard.

]]>CPSC Clarifies Changes to Monthly Recall Report Formhttps://www.consumerproductmatters.com/2014/10/cpsc-clarifies-changes-to-monthly-recall-report-form/
Mon, 13 Oct 2014 18:13:29 +0000Matthew Cohen, Matt Howsare and Chuck Samuels]]>http://www.consumerproductmatters.com/?p=2419Continue Reading]]>In May, we advised readers conducting recalls that the CPSC’s new monthly “recall progress report” form may catch you by surprise. Among other changes, the form included new provisions requesting companies to report recall notification statistics on social media platforms like Facebook and Twitter along with information from the company’s monitoring of online auctions for sale of their recalled product.

The surprise, of course, was that the form was written in a manner that seemingly presumed every company had already agreed to undertake social media outreach and monitor online auctions for recalled products as a component of their “corrective action plan” (CAP) with the CPSC.

In response to the new form, the National Association of Manufacturers (NAM) wrote a letter on behalf of 30+ trade associations arguing that these new obligations would amount to “unilateral retroactive modification” of previously agreed to CAPs. NAM also argued that the CPSC should have proposed any new expectations as part of its notice of proposed rulemaking to modify the agency’s voluntary recall process.

CPSC’s Response

Marc Schoem, the Deputy Director of CPSC’s Office of Compliance and Field Operations, responded recently to the NAM letter. Schoem clarified the CPSC’s intent for the revisions to the form and, more importantly, expressly stated CPSC’s expectations of recalling companies for the use of social media to distribute recall information and the monitoring of online marketplaces for the sale of recalled products.

Regarding notification through social media, Schoem states:

“While the traditional print and broadcast media has always been a key communication channel for the notice issued by the agency and the recalling company, the use of social media has become more prevalent in the U.S., and CPSC staff is encouraging greater use of this newer form of communication. Many companies use social media to market their products and to provide information to their customer base about the use of their products. Accordingly, we see announcing recalls on social media as a natural extension of a [company’s] use of social media.”

Regarding monitoring of online auction sites, Schoem states:

“Companies that undertake a voluntary corrective action plan are also being asked to look for their recalled products that are being sold online in auction sites as part of their routine monitoring of a recall program. Compliance staff has emphasized improved recall notification and monitoring over the past 18 months at various training programs. As part of this effort, we expect recalling firms to identify their recalled product being sold and offer the remedy to the seller.”

Regarding the manner in which the form was written, Schoem states:

“Only those elements that apply to the negotiated corrective action plan would be completed on the form. This is consistent with past practice regarding the monthly reporting on the progress of a recall: recalling [companies] complete only those portions that apply to the specific elements of the negotiated corrective action plan. As a result of your letter, we are taking steps to further clarify the progress reporting form to ensure that the recalling firm understands it needs to complete only that portion of the report that was negotiated as part of the corrective action plan.”

Notably, Schoem attached to his letter an updated monthly recall report form. The revisions to the form include language encouraging companies to monitor online auctions but asking for the monitoring information only “if” the company chooses to monitor them. The revisions also include language requesting information about notification through social media “as applicable under your corrective action plan.”

What Should Companies Expect?

In its response, the CPSC implies that it will make minor revisions to its form to clarify the new provisions are not mandatory. However, the letter also makes clear that the agency’s position remains the same regarding the use of social media for recall notifications and the monitoring of online auction sites for the sale of recalled products.

Based on the language in the letter, the CPSC will strongly encourage the use of social media for companies that already have a social media presence. In circumstances where a company actually used social media to market the recalled product, the agency likely will insist that the company use the same social media platforms to notify consumers of the recall. For those companies not already utilizing social media, it is unlikely that the agency would request the launch of a social media presence for the sole purpose of posting a recall notification.

Although the updated monthly recall report form states companies are “encouraged” to monitor online auction sites, the letter also makes clear that companies “are being asked” to search for the sale of their recalled products online as part of the “routine monitoring of a recall.” Further, the letter states the agency “expects recalling [companies] to identify their recalled product being sold and offer the remedy to the seller.” In other words, any company conducting a recall with the CPSC should expect to have to deal with this request from the agency and negotiate its feasibility on a case by case basis.

The NAM letter included additional legal objections and a policy argument that the agency should codify these new voluntary recall expectations through notice and comment rulemaking. However, the CPSC’s response shows that it is not deterred by the legal arguments and is not waiting on a rulemaking—meaning companies and their counsel should expect present and future recall negotiations with the CPSC to include a discussion about social media and online monitoring for recalled products.

]]>CPSC Gets it Right: Unanimously Regulates High-Powered Magnet Sets Through New Safety Standardhttps://www.consumerproductmatters.com/2014/09/cpsc-gets-it-right-unanimously-regulates-high-powered-magnet-sets-through-new-safety-standard/
Thu, 25 Sep 2014 17:56:32 +0000Chuck Samuels, Matt Howsare and Matthew Cohen]]>http://www.consumerproductmatters.com/?p=2356Continue Reading]]>We do not typically take positions on product specific issues pending before the U.S. Consumer Product Safety Commission (“CPSC”), but the CPSC’s new safety standard for magnet sets demonstrates both why the agency exists and how it can use its regulatory authority to protect consumers. In enacting the safety standard, the agency did not eradicate what are commonly referred to as “rare earth magnets” from the marketplace. Instead, the CPSC set a minimum level of safety for certain types of magnet sets based on the data necessary to take such action under the Consumer Product Safety Act (CPSA), the CPSC’s organic statute.

The practical effect of the CPSC’s action will be to prohibit the sale of magnet sets composed of small but very powerful magnets that have proven both extremely attractive and hazardous to children. Although these types of magnet sets were marketed to adults to manipulate into various shapes for entertainment or stress relief, the individual magnets found their way into the hands, and ultimately, the mouths of children. When accidentally swallowed, the magnets can bond and become trapped within the digestive system in a manner that can cause severe internal damage.

Summarizing the rationale for his vote, Commissioner Mohorovic said in his closing statement at the CPSC’s decisional meeting:

“Without the requirements set forth in this rule, small and powerful magnets would continue to present what I consider the quintessential latent hazard to young children”

Unanimity of the Decision

There are varying and strong opinions related to the CPSC’s recent litigation and enforcement methods against magnet companies to compel recalls of certain magnet sets already on the market. However, in our mind there is significantly less dispute in the professional safety community regarding the agency’s issuance of a safety standard that governs the future sale of these types of magnets.

The Commission’s original decision to issue a proposed safety standard passed in a unanimous and bipartisan 4-0 vote during a tumultuous time at the agency when other regulatory initiatives sometimes stalled because the Commission had two Democratic and two Republican members. Over two years later, and with just one of those four Commissioners remaining, a different panel of Commissioners passed the final version of the safety standard in a unanimous and bipartisan 4-0 vote (Commissioner Buerkle recused herself citing a potential conflict with the ongoing litigation, which could be appealed to the Commission).

Despite the unanimity of the vote, there is no doubt that this decision was difficult for both the CPSC staff and the Commissioners. This action effectively eliminates a product line from the marketplace and severely impacts the companies who sell these products with a CPSC-estimated cost to the industry of about $6 million annually. Prior to the rulemaking and parallel enforcement actions to compel recalls, there were several companies operating in the US and selling these products. During the hearing, Chairman Elliot Kaye said he felt the weight of this decision and understood the impact to the owners of those companies, including the owner of Zen Magnets, who had recently contacted Kaye and defended his products as a “window to a universe of curiosity and inspiration.”

The Statutory Requirements

The agency also had to weigh whether it could meet the necessary statutory criteria to implement the rule, including findings that the standard is reasonably necessary to eliminate or reduce an unreasonable risk, there exists no voluntary standard that adequately addresses the hazard, the expected benefits bear a reasonable relationship to the costs, and no less burdensome methods exist to achieve the same result (e.g., more effective warnings, safety education campaigns, or any other efforts that could meaningfully reduce the hazard).

In the end, the Commission was swayed by the tragic death of a 19 month old child; a staff-estimated 2,900 ingestions over a five-year period; a staff-estimated $28.6 million in annual societal benefits through avoided medical costs; and the lengthy testimony from the medical community emphasizing the high prevalence, difficult diagnosis, and potential for serious injury associated with these incidents. This is a relatively rare example where weighing the statutory criteria led to the required foundation for this type of regulatory judgment and is a precedent not widely applicable.

The New Safety Standard

Although many in the professional safety community can often find fault with the CPSC’s actions, the emergence of a new hazard posed to children by magnet sets and the adoption of a safety standard to address that hazard serves as a good example of why Congress created the CPSC and gave it the authority to take such actions under the CPSA.

]]>Guilty Convictions in Salmonella Trial May Signify Landmark in Criminal Food-Safety Prosecutionshttps://www.consumerproductmatters.com/2014/09/guilty-convictions-in-salmonella-trial-may-signify-landmark-in-criminal-food-safety-prosecutions/
Mon, 22 Sep 2014 22:19:20 +0000Mina Nasseri and Michelle Gillette]]>http://www.consumerproductmatters.com/?p=2343Continue Reading]]>This space has thoroughly explored the various forms of civil liability food companies face for the mislabeling and/or deceptive marketing of their products. Last week, a set of landmark convictions in a criminal food-safety prosecution potentially signal increased criminal liability for food companies when matters of public health and safety are at play…

On Friday, September 19, 2014, a federal jury convicted two former executives of a peanut-processing company of conspiracy and other charges in connection with a massive Salmonella outbreak in 2009, which killed nine people, sickened 700 others, and led to one of the largest U.S. recalls ever. Stewart Parnell, former owner of Peanut Corporation of America (PCA), and other former employees were convicted of conspiracy, mail, and wire fraud in violation of federal anti-fraud and conspiracy statutes, and the introduction of misbranded food into interstate commerce in violation of Sections 331(a) and 333(a)(2) of the Federal Food, Drug, and Cosmetic Act (FDCA). Parnell alone was also convicted of the introduction of adulterated food into interstate commerce in violation of Sections 331(a) and 333(a)(2) of the FDCA; he could face more than three decades in prison.

At trial, prosecutors presented evidence to establish that Parnell and other PCA employees knowingly and willingly participated in a conspiracy to conceal that PCA’s products were contaminated with food-borne pathogens, such as Salmonella. For example, prosecutors argued that the PCA employees defrauded customers (such as Kellogg Co. and General Mills Inc.) by concealing the fact that their products tested positive for pathogens and for fabricating test results to show their products were pathogen-free when in fact there had been no testing or tests had actually revealed the presence of pathogens.

According to experts, the case is one of the first felony convictions of a food processor under the Federal Food, Drug and Cosmetic Act. Over the last several years, there has been an increased focus by federal prosecutors on food-safety cases such as this one. Earlier this year, the owners of an Iowa egg company were indicted in connection with a 2010 Salmonella outbreak and, last year, the owners of a Colorado cantaloupe farm pleaded guilty to federal misdemeanor charges related to a 2011 listeria outbreak. So what does all this mean? Food processors should perk up and pay more attention to their products’ food safety than they have in the past, or else they risk facing criminal liability for their actions. Food companies incorporating ingredients from processors into their products, meanwhile, should evaluate their supply agreements with those processors to ensure they are indemnified by the processor for any deceptive or criminal actions taken by the processors without their knowledge.

]]>Do Not Pass Go: Federal Judge Orders Execs Jailed for Contempt of Recall Orderhttps://www.consumerproductmatters.com/2014/09/do-not-pass-go-federal-judge-orders-execs-jailed-for-contempt-of-recall-order/
Tue, 16 Sep 2014 18:07:01 +0000Dan Herling and Joshua Foust]]>http://www.consumerproductmatters.com/?p=2328Continue Reading]]>A recent federal decision has made clear that court-ordered recalls can have real teeth, not just for manufacturers but also their officers—especially when the court has reason to suspect a company’s execs are deliberately dragging their feet.

On Tuesday, September 2, the Northern District of Georgia held the CEO and a senior vice president of Hi-Tech Pharmaceuticals in contempt for their repeated delays in carrying out a court-ordered recall. The court had issued the original recall order in May 2014, finding that Hi-Tech had run afoul of a long-standing injunction by continuing to make unsubstantiated weight loss claims about its dietary supplement products in violation of Sections 5 and 12 of the Federal Trade Commission Act. Months later—and with the recall far from complete—the court ordered the executives jailed as a sanction.

Expressing concern that the execs were not implementing the recall in good faith, the court emphasized several facts justifying the harsh penalty:

The FTC had presented evidence showing that large volumes of the non-compliant products were still available in retail stores.

Hi-Tech had not begun circulating a recall notice to its retailers until 50 days after the court ordered the recall.

That recall notice did not identify the relevant products by lot or serial number, nor did it provide instructions for returning the products to Hi-Tech.

Hi-Tech could not show that its proposed mailing list accurately reflected the complete universe of retailers carrying the non-compliant supplements.

The company’s sales department had not adequately followed up with retailers to ensure that they were complying with the recall.

Hi-Tech had not conspicuously disclosed the recall notice on its website.

The court explained that the execs would remain incarcerated until they could show that four conditions were met:

No more products making the barred claims remain on retail store shelves.

Hi-Tech has issued a revised recall notice detailing exactly which specific products are being recalled and what return procedures to follow.

The company has distributed the recall notice to all its retailers and distributors by letter or email.

The recall notice is prominently displayed on each page of the company’s website.

The court’s reaction, severe as it may seem, didn’t exactly come out of left field. The original permanent injunction barring Hi-Tech from making the advertising claims at issue was issued in 2008. Five years later, in August 2013, the court found that Hi-Tech had resumed making the prohibited claims in violation of that injunction, before issuing sanctions and ordering a recall in May 2014.

The incarceration decision, in short, represented the culmination of a persistent pattern of non-compliance that had begun years earlier. But the extreme fact pattern in this case should not obscure how important it is for companies to tackle every recall, voluntary or court-ordered, with a detailed plan and timeline for achieving compliance.